| T.R | Title | User | Personal
Name | Date | Lines |
|---|
| 1003.1 | $60k according to whom? | MKOTS3::LEVY_J | | Mon Apr 29 1996 14:35 | 9 |
| re: .0
>company has grown to ~20 employees and ~$3 million in annual revenue.
>Based on the value of the company, my options are worth about $60k.
>However, as the company is still private, I don't see a mechanism to
In the absence of a market, how did you determine the options were
worth $60k? Determining the value of a private company is a rather
subjective task.
|
| 1003.2 | | 2155::michaud | Jeff Michaud - ObjectBroker | Mon Apr 29 1996 15:03 | 29 |
| >> company has grown to ~20 employees and ~$3 million in annual revenue.
>> Based on the value of the company, my options are worth about $60k.
>> However, as the company is still private, I don't see a mechanism to
> In the absence of a market, how did you determine the options were
> worth $60k? Determining the value of a private company is a rather
> subjective task.
I can't speak for the base noter, but I once bought stock in
a private company (through someone who worked there, and
because you had to be an employee to purchase it, it had to
be issured as joint ownership) and then the friendship soured
so I decided to sell out...
What this company does is compute their stock price once per
year. That is the price I ended up getting for the shares
when I sold it back to them (in my case it was a small loss so
they were probably happy to buy it back). My guess is .0's
ex-company does the same thing. However I don't believe a
private company has any obligation to actually buy the stock
back. Back to my case, I had to write a letter to the board
of directors asking them to buy it back. The woman who handled
the stock for the company was also a real pain in the you know
what, and I think the only reason they did buy it back was to
get me off there backs.
Another possibility for .0 is to check to see if their options
are transferable, and if so, may want to see if they can just
sell the options back to the company or individuals that still
work for the company.
|
| 1003.3 | How many shares? | 2155::michaud | Jeff Michaud - ObjectBroker | Mon Apr 29 1996 15:15 | 18 |
| > Also, if I exercise my options (my option price is 1-cent), I was told
> that the company is required to report the roughly $60K dollar
> difference to the IRS as income to me (and hence a pretty hefty tax bite)
You probably want to check with an acccountant on this, or at
least check IRS Pubs. 525 and 550. Remember that Digital's
ESPP is bascially considered options which we exercise (or the
semi-annual "buy in" date) and the taxable events doesn't occur
until you actually sell the stock (the "income" which is the diff.
between the option price and the fair market value of the stock
on the "buy in" date, and the other event being any capital
gain or loss left over).
Assuming there is no taxable event to simply exercise your
options, and while you didn't say how many shares your
options are worth, or what the share price is, my guess is
it's a tiny sum to exercise the options, and that would be
your best bet.
|
| 1003.4 | | AIAG::WEISSMAN | | Tue Apr 30 1996 16:41 | 13 |
| It depends on the kind of options - qualified,
non-qualified, incentive, etc. Some of them
have taxable consequences when you excercise and
some don't. If the options are the kind that
have a taxable consequence when you exercise them,
then yes, you will have to pay tax on the paper
gain and you will not be able to sell the stock
and realize that gain until the stock becomes
publicly traded or you can find a buyer for the
private stock (assuming the laws/rules allow you
to sell it privately). The amount that you
pay tax on now will become the cost basis of the
stock when you are eventually able to sell it.
|
| 1003.5 | Thanks for the info! | DECWET::CAREY | | Mon May 06 1996 17:54 | 20 |
|
RE .1: The value of the company was computed based on revenue, assets,
etc. A better way to state my options might be to say that I have the
option to buy 5% of the company. Still, I realize that this renders
such a "worth" very subjective.
RE .2: I don't know if the options are transferable. I'll look into
that.
RE .3-4: I don't know what type of options they are, but I am supposed
to be receiving a letter shortly outlining my options and possible
courses of action.
For those of you who might be saying, "wow, this guy sure don't know
much" ;^), I never really counted on these options. This job was my
first in the "computing industry", and so I was just happy to be
programming and getting paid for it :-). So this whole scenario is a
potential bonus.
I'll update you all once I know more. Thanks again for the info.
|